What is MiKaDiv? A Guide to the New German Tax Reporting Regime

MiKaDiv (Mitteilungsverfahren Kapitalerträge Dividenden) is Germany’s new digital reporting procedure for investment income, including dividends and interests, transforming the way investors access tax relief in Germany.

The reporting regime introduces new reporting requirements through the custody chain and has recently undergone reviews and clarifications released by the German Tax Authority to align it more to the broader EU FASTER initiative, which aims to streamline and digitise tax relief processes across member states while also combating tax abuse and fraud.

Here, we walk through everything you need to know about MiKaDiv.

Why was MiKaDiv introduced?

MiKaDiv was introduced to simplify, modernise, and digitise Germany’s approach to withholding tax reporting on dividends. Traditionally, investors relied on paper-based tax certificates to reclaim withholding tax – a process that was slow, error-prone, and left loopholes that opened up to the opportunity for tax fraud, as witnessed by the CumEx-Files in 2012, whereby German taxpayers were left defrauded of billions of Euros.

Modernising this process with MiKaDiv enables the German Tax Authority to track custody chains and transaction timing, especially around dividend dates, which were key elements exploited in Cum/Ex schemes.

This shift marks a significant evolution in how financial institutions handle dividend tax data moving from manual, fragmented processes to a centralised, automated system.

How does MiKaDiv change existing processes?

MiKaDiv, part of Germany’s Withholding Tax Modernisation Act, replaces traditional paper-based tax certificates (also known as tax vouchers) with automated digital reporting. This shift enhances transparency, ensures data integrity, and reduces the risk of tax evasion and fraud across the custody chain.

Under the new regime, once MiKaDiv reports are accepted, investors receive a unique reference number (UUID) – which replaces the older paper format – which is then used when submitting tax reclaims and accessing tax relief on German investment income.

Since 2024, all tax reclaims must be submitted digitally via the BOP portal. In July, the German Tax Authority launched DIP KAFE, enabling bulk submissions by investors and intermediaries.

Additional updates including clarifying reporting formats, expectations for custody chain participants, and guidance on financial arrangements all align MiKaDiv more closely with the EU FASTER directive, streamlining tax relief procedures across member states. 

When will MiKaDiv be implemented?

MiKaDiv will be effective from January 1, 2027, applying to any payments made post-December 31, 2026. While this deadline seems far away its imperative organisations start assessing how their current processes are set up and plan accordingly if these are not sufficient.

From initiation to full compliance, banks should expect a 2–3-year implementation window, depending on their current systems, resources, and readiness. What does this mean? Businesses need to start preparing now (if you haven’t already!).

Who is affected and what does it mean for institutions and customers?  

• German custodian banks and paying agents are responsible for reporting investment income and capital gains data directly to the German tax authorities (BZSt) using the new digital format.
• Foreign financial institutions are required to provide detailed data to German paying agents. Firms outside Germany that hold or manage German securities must provide detailed data to German paying agents, including beneficial ownership and custody chain information.
• Investors with omnibus accounts or cross-border holdings are also impacted. While they won’t report data themselves, their information must be accurately captured and transmitted through the custody chain.
  
  

What needs to be reported on?

To comply with MiKaDiv, every party across the custody chain must submit detailed data that enables full transparency. This includes:

• Beneficial owner and account details: Identifying the actual investor behind each dividend.
• Custody chain and LEI data: Mapping all intermediaries involved, attributing their position in the chain and identifying the intermediary. using Legal Entity Identifiers.
• Securities and income information: Including ISINs, dividend amounts, amount of tax withheld and payment dates.
• Transaction activity: Covering relevant trades before and after the dividend event, including details on financial arrangements.
• UUIDs and exemption reports: Unique identifiers for each submission and records of any tax relief granted.

This structured data enables more accurate tax reclaims and supports Germany’s shift to digital tax reporting.

What is the impact of not being MiKaDiv-ready? 

If financial intermediaries are not prepared for the MiKaDiv implementation, it could have various consequences – operationally, financially, and reputational:

• No access to tax relief: Without a valid UUID, investors cannot reclaim German withholding tax on behalf of their clients.
• Client Compensation Costs: Institutional clients expecting tax reclaims may demand compensation for missed refunds.
• Operational Penalties and Legal Risk: Under the tightened liability regulations, the intermediary may face fines or legal action for failing to meet its reporting obligations. 
• Reputational Damage and Client Loss: The Intermediary’s failure to comply could lead to loss of trust and client churn, especially among asset managers and institutional investors who rely on accurate tax processing.
  
  

MiKaDiv is coming. Is your firm ready? 

From 2027, German and foreign financial institutions must report dividend tax data digitally. Make sure your teams are ready:

• Assess your current data model and reporting requirements and existing capabilities
• Identify gaps and data deltas in custody chain transparency
• Engage with Xceptor to future-proof your tax operations
• Implement a solution that can help automate the processes for you

Xceptor: Enabling MiKaDiv Compliance at Scale

As a trusted partner to 8 of the top 10 global custodians for tax processing, Xceptor is at the heart of the MiKaDiv transformation.

We’re committed to supporting both foreign intermediaries who must transmit data along the custody chain and German agents who report directly to the German Tax Authority. With deep experience in German e-filing and maintaining secure connections with the GTA, Xceptor ensures seamless, compliant data transmission across the entire process.

Ready to prepare? Get in touch with our team to learn how Xceptor simplifies MiKaDiv compliance with intelligent data automation and prepares existing clients for the deadline, and how we can help you do the same.